Lowe's Companies, Inc.’s (LOW Quick QuoteLOW - Free Report) solid run on the bourses is buoyed by robust gains from its Total Home Strategy and digital business. Total Home Strategy focus on boosting productivity and enriching the integrated omni-channel shopping experience. This strategy is likely to grab higher market share across Lowe’s DIY and Pro categories. In addition, management remains committed to maximizing its shareholder value through a discreet and efficient capital-allocation strategy.

Such well-chalked initiatives drove this renowned home-improvement retailer’s shares despite a tough retail backdrop. This presently Zacks Rank #2 (Buy) stock has rallied 52% in a year, outperforming the industry’s 40.6% growth. A Growth Score of B with a commendable long-term earnings growth rate of 13.7% further speaks of its potential.

Let’s delve deeper.
Detailing Strategies
Strong digital base has been aiding Lowe’s performance for a while now. Management is focused on enhancing the omni-channel retailing capabilities in store operations, website and supply chain to resonate well with customers’ demand to shop. Management launched Lowe's' One Roof Media Network to boost digital advertising. Its focus on perpetual productivity improvement or the PPI initiative is also consistently yielding results as LOW leverages store payroll using technology to lower tasking hours, improve customer service and drive sales productivity. During the third quarter of fiscal 2021, sales at Lowes.com increased 25% year over year.

Lowe's Total Home strategy includes complete solutions for various types of home repair and improvement needs. The strategy is an extension of LOW’s retail-fundamentals approach. Management had earlier said that this strategy focuses on strengthening customer engagement and market share, especially through its intensified focus on Pro customers. The initiative encompasses improving online business, refurbishing installation services and enhancing localization efforts.

Pro business is a significant driver for Lowe's. It continuously boosts pro-focused brands and refurbished its pro-service business website LowesForPros.com. During the fiscal third quarter, the Pro category again outpaced DIY, increasing more than 16% year over year and 43% on a two-year basis. It is also on track to build out the Pro power tool accessory program, including launches from Spyder and DEWALT. Management is quite focused on enhancing the Pro offering across LOW’s stores and online with improved service levels, deeper inventory quantities, intuitive store layout and addition of Pro-focused brands. Given these factors, the Pro segment is likely to continue its momentum.
Lowe’s in 2022
All the aforesaid strengths confirm Lowe’s bullish run on the bourses next year. Analysts are also optimistic about the stock’s prospects. The Zacks Consensus Estimate for LOW’s fiscal 2022 sales and earnings per share (EPS) suggests growth of 1% and 7.7%, respectively, from the year-ago period’s corresponding readings. Also, the consensus mark for the said fiscal year’s earnings has moved 1.1% north over the past 30 days to $12.86.

Management recently issued guidance for fiscal 2022. It projects total sales between $94 billion and $97 billion, including the 53rd week. The said week is likely to raise sales $1-$1.5 billion. This projection indicates growth from $90 billion reported in fiscal 2020. Further, EPS is envisioned in the band of $12.25-$13 for fiscal 2022, implying an increase from adjusted earnings of $8.86 delivered in fiscal 2020.

Speaking of Lowe’s shareholder-friendly moves, the board authorized a new $13-billion share repurchase program, given LOW’s cash-flow generation capabilities and growth strategies. The new buyback plan has no expiration date and further adds to the earlier program's balance, having $7.3 billion as of Dec 14, 2021. This brings Lowe’s current total share repurchase authorization to around $20 billion. Management expects repurchase of shares worth $12 billion in fiscal 2022. Also, Lowe’s looks well placed on the dividend-payout front. LOW has a dividend payout of 26.3%, dividend yield of 1.2% and a free cash flow yield of 4.1%.

Given all the factors discussed above, Lowe’s is poised well for growth and appears a lucrative investment bet.
More Solid Picks in Retail
Some other top-ranked stocks are Boot Barn Holdings (BOOT Quick QuoteBOOT - Free Report) , Home Depot (HD Quick QuoteHD - Free Report) and Tractor Supply Company (TSCO Quick QuoteTSCO - Free Report) .

Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank #1 (Strong Buy) at present. The stock has jumped 159.7% in the year-to-date period. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and EPS suggests growth of 54.6% and 188%, respectively, from the year-ago period’s corresponding figures. BOOT has a trailing four-quarter earnings surprise of 35.3%, on average.

Home Depot, a renowned home-improvement retailer, presently carries a Zacks Rank of 2. HD has a trailing four-quarter earnings surprise of 12.1%, on average. The stock has rallied 47% in the year-to-date period.

The Zacks Consensus Estimate for Home Depot’s current-year sales and EPS suggests growth of 13.6% and 28.7%, respectively, from the corresponding year-ago levels. HD has an expected EPS growth rate of 12.6% for three-five years.

Tractor Supply Company, a rural lifestyle retailer in the United States, currently flaunts a Zacks Rank of 2. TSCO has a trailing four-quarter earnings surprise of 22.8%, on average. Shares of TSCO have surged 58.7% year to date.

The Zacks Consensus Estimate for Tractor Supply Company’s current-year sales and EPS suggests growth of 19% and 23.9%, respectively, from the year-ago corresponding readings. TSCO has an expected EPS growth rate of 10.2% for three-five years.

Source: Zacks.com

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